PanamaTimes

Sunday, Oct 04, 2026

Crypto bankruptcies threaten customer life savings

Crypto bankruptcies threaten customer life savings

A judge will hear a request to honor Voyager Digital customer withdrawals

Some crypto investors are on the edge of financial ruin after trusting their nest eggs to two unregulated crypto marketplaces that went bankrupt.

Many put their life savings into virtual currency only to see their money frozen while the courts decide the fate of their investments.

Their plight has members of Congress calling for investor education and greater regulation.

Senators Debbie Stabenow, D-Mich., and John Boozman, R-Ark., introduced a bill Wednesday to give the Commodity Futures Trading Commission new tools and authorities to regulate digital commodities.

The logo of the crypto company Celsius on a computer screen June 14, 2022.


New laws will come too late for customers of Celsius Network and Voyager Digital.

One investor named Donald said he feels "completely ashamed and embarrassed" for sinking $31,000 into Voyager Digital Holdings.

"Losing this money with no end in sight has been unbearable for my family and I," Donald said. "I wake up most nights and just walk up and down the stairs contemplating on my own mistakes and wondering if this will ever end."

John Dalisay, who is paralyzed from the neck down, sent a letter to a judge saying he is depressed and unable to work after his life savings were frozen.

"I already suffered a tragic loss of my ability to ever walk again and did my best to be strong and fight to start over with my life," Dalisay wrote. "I feel humiliated and defeated."

Dalisay invested money from his $8-per-hour job at Celsius Network.

"I do not seek luxuries, your honor," he wrote. "I only wanted to be able to afford basic necessities. Please help me be whole again as this situation Celsius created is wreaking havoc on my mental health."

Voyager customers asked a judge to unfreeze their accounts. A hearing on that motion is scheduled for today.

Crypto lender Celsius and crypto broker Voyager Digital filed for Chapter 11 bankruptcy in July, freezing their customers’ assets. Celsius has 1.7 million customers and $6 billion in assets. Voyager counts 3.5 million users and over $5.9 billion of cryptocurrency assets.

Corporate bankruptcies are generally battles between rival groups of Wall Street investors backed by lawyers who often bill $1,000 or more per hour.

The Celsius and Voyager cases are exceptions. Everyday investors are flooding the courts with desperate pleas asking for their money back.

"There’s rarely enough money to cover the investor," said Melanie Senter Lubin, president of the North American Securities Administrators Association, who testified last week at a Senate Banking Committee hearing on crypto fraud.

"If those investors are considered unsecured creditors, they’re going to be put in the pool with everybody else, and they’re typically at the end of the line."


Safer than a bank?


Celsius and Voyager promoted the safety of their investments.

"Celsius stated overwhelmingly … that putting our funds into [their] custody was much safer than having it at a regular bank account," wrote Paul Niehe, who transferred his pension savings into crypto.

Ryan Hourigan invested a portion of his paycheck into Voyager every month on top of rolling his life savings into his account.

"I used Voyager to replace my savings account as it was advertised as FDIC insured," Hourigan said. "I am now filled with regret for doing so and fear that I pretty much lost everything for trusting this company."

"They made astonishing claims, like offering up to 20% interest while claiming they were FDIC insured and quote ‘safer than banks,’" Sen. Elizabeth Warren, D-Mass., said at last week’s hearing. "No risk. Twenty percent return. That was a lie from the start."

This May 4, 2021, file photo shows the Federal Reserve building in Washington.


The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve have ordered Voyager to stop making false and misleading statements concerning its FDIC deposit insurance status and to take immediate corrective action.

Celsius allowed customers to get loans in real dollars by using their crypto holdings as collateral. Customers could also earn interest by lending their deposited coins, according to the company's white paper.

Voyager offered a secure way to trade over 100 different crypto assets using a mobile app and advertised rewards on more than 40 cryptocurrencies, the company's white paper said.

At least one person has turned to crowdfunding for help. Eduardo Dorrance wants to save his family’s animal rescue with a GoFundMe campaign. His family is a month away from losing the business.


Crypto winter
The Binance Exchange website on a laptop computer arranged in Dobbs Ferry, N.Y., Feb. 20, 2021.


Crypto investors who used other platforms are not immune from losses.

Cryptocurrencies lost an estimated $2 trillion in value since peaking last year in a market collapse nicknamed the "crypto winter."

Bitcoin, the biggest cryptocurrency, topped out at $68,789 per coin Nov. 10, 2021, before falling to a low of $17,709 June 18, according to CoinMarketCap data.

"It’s very important that people understand how a particular investment works, how they could lose money in the investment, what they pay for that investment, and what recourse they have," Gerri Walsh, senior vice president of investor education at the Financial Industry Regulatory Authority, said.

"When this is happening outside the space of regulation, the recourse of investors can be difficult."

Walsh testified at the Senate hearing.

Comments

Oh ya 4 year ago
It is not up to the government to baby sit the stupid greedy people. The stupid people heard what they wanted to hear 20% interest.. They went to the crypto casino and lost. Stop whining

Newsletter

Related Articles

PanamaTimes
0:00
0:00
Close
Advertising trick: Pepsi’s Harrier Jet Commercial Led to a $700,000 Court Fight
Why 2027 Could Be a Strong Year for Stocks—and Why the Forecast Is Fragile
Trump’s Top General Seeks an Exit Strategy From Iran War, Report Says
Brock Lesnar Retires From Wrestling, Closing a Career of Rare Athletic Range and Lasting Controversy
Trump-Era Policy Shifts Test the Boundaries of U.S. Institutions
Weight-Loss Drug Boom Tests the Limits of Prescription Advertising Rules
Breaking With the Past: One of the World’s Smallest Countries Changes Its Name
AI Is Remaking the US Economy, From GDP Growth to iPhone Prices
Cuba’s Grid Fails Again as Fuel Crisis Deepens
Nazca Lines Flight Crash Kills Thirteen as Peru Suspends Aerodiana
OpenAI Faces Demands for Full Disclosure After Models Breach Hugging Face
FIFA’s Private-Investment Plan for World Cup Rights Draws European Revolt
Why Americans Queue for $15 Ice Cream and a $100 Caviar Pint
OpenAI Sued After ChatGPT Allegedly Discouraged Emergency Care Before Near-Fatal Embolism
Miliband Sets Climate and International Law at Centre of UK Diplomacy
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
Morgan Stanley Builds a Wall Street Lead in AI Infrastructure Finance
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Spain Defeats Argentina in Extra Time to Win Second World Cup
Venezuela’s Earthquake Devastation Turns U.S. Investment Opportunity Into a Thirty-Seven Billion Dollar Reconstruction Challenge
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
The Ledger Will Not Trust on Faith
Trump Administration Pressures Banks to Restrict Financial Access for Undocumented Immigrants
The Ten World Cup Finals That Defined Football History
Smartphones Are Getting More Expensive, Sales Are Collapsing, and Even Apple Admits: "Prices Will Rise"
The AI Race Enters Its Infrastructure Era
Colombia Influencer Dies After Cosmetic Procedure at Unlicensed Bogota Salon
A Quiet Bastille Day: France Grapples with World Cup Heartbreak and Leftover Fireworks
Spain in Ecstasy: "We Feel Unbeatable, We Taught the Whole World a Lesson"
On the Island That Did Not Yield to Trump, There Is No Electricity, and 10 Million Live in Darkness
World Cup Visitors Turn American Big-Box Stores Into Souvenir Stops
Anthropic Reengineers Agentic Architecture to Shift Autonomous Workplace Automation to the Cloud
Global Crisis Alert: Escalating Middle East Tensions and UK Political Upheaval
Japanese Technology Firm Fujitsu Launches Advanced Artificial Intelligence Tool for Corporate Disclosures
South Africa Officially Launches Nationwide Campaign for Highly Contested Local Government Elections
United Kingdom Commits Additional Funding for Unexploded Ordnance Clearance in Laos
Singapore Announces Stringent New Greenhouse Gas Regulations for Commercial Cooling Systems
Cambodia and Thailand Hold High-Level Border Security Talks at United Nations Headquarters
Myanmar Military Government and China Sign Major Agreement to Upgrade Media and Cultural Cooperation
Knife Attack at Swiss Train Station Leaves Three Injured in Suspected Act of Domestic Terrorism
Transnational Extortion Gang Threatens Canadian Police With Army of One Thousand Armed Operatives
Australia Imposes Forty-Two-Day Quarantine on Cruise Ship Passengers Following Deadly Hantavirus Outbreak
International Monetary Fund Unlocks Seven Hundred Million United States Dollars for Sri Lanka Following Economic Reforms
Australia Launches Record One Point Four Billion Dollar Lawsuit Against Chemical Giant 3M Over Contamination
China and Canada Foreign Ministers Meet in Ottawa in Effort to Stabilize Strained Diplomatic Ties
Indonesia Demands Urgent United Nations Security Council Reform Amid Escalating Global Conflicts
Extreme Weather Patterns Trigger Severe Drought in Madagascar and Destructive Flooding in East Africa
Indian State of Karnataka Faces Political Upheaval as Chief Minister Siddaramaiah Abruptly Resigns
Philippines and Japan Reaffirm Defense Ties as Crucial for Indo-Pacific Regional Stability
Norway Joins French Nuclear Deterrence Initiative in Major Shift for European Security Architecture
×